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September 07, 2016 at 10:47 AM
Assets of the world’s 300 biggest pension funds experienced their first decline since the beginning of the global financial crisis in 2015, down by more than 3% to a total of $14.8 trillion, compared with growth of over 3% in 2014, Pensions & Investments and Willis Towers Watson reported Monday.
Although assets fell last year, cumulative asset growth since the crisis approached 19%, the research showed.
North America had the highest five-year compound growth rate of around 6%, compared with 4% in Europe and 1% in Asia/Pacific.
The world’s top 300 pension funds now represent 42% of global pension assets, as of March 31, the report said.
During 2015, only hybrid plan assets grew, up nearly 14%, while all other fund types declined: defined benefit plans assets by 5%, defined contribution by 2% and reserve funds by an estimated 0.3%.
“The continuing tides of asset rises and falls combined with ever increasing liabilities bears testament to how difficult it has become for funds to meet their respective missions,” Roger Urwin, global head of investment content at Willis Towers Watson, said in a statement.
“Large asset owners can have an advantage in this volatile, complex and ambiguous investment world by improving organizational effectiveness to enhance decision making. It has become clear that good investment governance is the key determinant in producing the competitive edge necessary to transform portfolios and succeed in the ever-evolving mission of trying to pay benefits securely, affordably and in full.”
The new research showed the U.S. continued to have the largest share of pension fund assets, with 38%, while Japan had around 12%.
(Related on ThinkAdvisor: 25 Best Countries for Retirement Security: 2016)
Twenty-seven new funds entered the ranking during the past five years, with the U.S. contributing 10 funds on a net basis, followed by the U.K., South Korea, Australia, France, Peru, Vietnam and Italy.
During the same period, Mexico had the largest net loss of funds from the ranking (four), followed by Switzerland, Germany and Japan with net three fund losses each.
All told, the U.S. had 131 funds in the research, the U.K. 27, Canada 19, Australia 16, Japan 15 and the Netherlands 12.
Sovereign pension funds continue to feature strongly in the ranking, with 27 of them accounting for 28% of assets and totaling around $4.2 trillion.
Following are the P&I/Willis Towers Watson top 20 pension funds by assets. Rankings of sovereign pension funds are noted in parentheses.
Top 20 Pension Funds
20. GEPF—South Africa
Total assets: $103 billion
Defined benefit: $103 billion
Defined contribution: $0
(No. 8-ranked sovereign pension fund)
19. ATP—Denmark
Total assets: $106.6 billion
Defined benefit: $0
Defined contribution: $106.6 billion
18. Ontario Teachers—Canada
Total assets: $124 billion
Defined benefit: $124 billion
Defined contribution: $0
17. Texas Teachers—U.S.
Total assets: $125.3 billion
Defined benefit: $125.3 billion
Defined contribution: $0
16. Florida State Board—U.S.
Total assets: $$147.8 billion
Defined benefit: $139.2 billion
Defined contribution: $8.6 billion
15. New York City Retirement—U.S.
Total assets: $155.1 billion
Defined benefit: $155.1 billion
Defined contribution: $0
14. Employees Provident Fund—Malaysia
Total assets: $161.7 billion
Defined benefit: $0
Defined contribution: $161.7 billion
(No. 7-ranked sovereign pension fund)
13. New York State Common—U.S.
Total assets: $173.5 billion
Defined benefit: $173.5 billion
Defined contribution: $0
12. Local Government Officials—Japan
Total assets: $176.2 billion
Defined benefit: $176.2 billion
Defined contribution: $0
